Taking Stock: Scummy law firm boils bad blood and spoils investment advice

Dear Mr. Berko: My son-in-law, who is a very successful litigation lawyer, suggested I contact you for your opinion about recommendations that a brokerage firm made to my husband and me.

We recently sold our business after 26 years for $2.2 million (after taxes) and were recently contacted by a well-known and respected brokerage firm, whose people planned an investment portfolio for us. We discussed the investment options and recommendations with our son-in-law, who told us he doesn't like the investment advice.

This firm would manage our investment account for a 1 percent annual fee (no commission or other costs) and no long-term contract. They've recommended a mix of municipal bonds, mutual funds, corporate bonds, preferred stocks, exchange-traded funds, closed-end funds and common stocks, some of which would be used to write options. Neither my husband nor I understand that part, but it sounds safe and low-risk.

We need income. We have no savings to speak of, two little IRAs and a home with a small mortgage. We're not yet old enough to qualify for Social Security, which will total about $2,200 a month in six years, when we begin receiving those benefits.

All of us would appreciate your input.

ST, Cleveland

Dear ST: Thank you for reading my column, for your long letter (which you can see has been shortened) and for trusting me with your very personal financial and familial information.

I know your son-in-law's name, and I'm familiar with the firm in which he's a partner. And as candid as I can be, I have no reason to trust your son-in-law, and I have good reason not to trust his firm. And I'm going to tell you why.

In 2003 I published a favorable article about a stock that traded on the NYSE. I haven't commented on the stock since then. In 2006, a client of your son-in-law's firm purchased a significant number of shares of that stock, and shortly thereafter, the stock's price collapsed.

Your son-in-law's firm sued every officer and director of the firm, the selling broker and the selling broker's firm, more than 20 other peripheral participants -- and me. Your son-in-law's law firm tried to demonstrate that my article published three years prior to their client's purchase (and I don't even know their client) influenced his decision to own the stock. So I became a defendant in an $11.5 million dollar claim.

My daughter, who is a lawyer (and one of the good ones -- even I would not want to be on the opposing side), threatened to countersue your son-in-law's firm. And within a week after her couriered letter and her two phone calls, your son-in-law's law firm withdrew my name as a defendant.

In my opinion, some of the lawyers who represent that firm were not born but rather poured from the contents of a colostomy bag. That firm has an odor that smells like putrid yellow pus seeping from an overripe boil. And because of your very personal three-page letter, I felt I owed you this explanation.

For the record, I'd be proud to own that portfolio you sent me, but in order to avoid any potential conflict, on the advice of my council, I will not comment on the suitability of that portfolio. Certainly your son-in-law has trusted contacts in the money management business, and they may be a good source of information for you. If he lacks those contacts, some of the fine partners in his prestigious firm should be able to refer you to several qualified professionals. Failing that, you can check the Yellow Pages, and there are some notable banks in Cleveland that would be willing to provide you with the advice or guidance you need.

But please include me out. Meanwhile, I wish you good income, I wish you good growth, and I wish you good health. And I wish your son-in-law would change professions.

Please address your financial to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. COPYRIGHT 2011 CREATORS.COM

Published: Thu, Dec 15, 2011

Comments

  1. No comments
Sign in to post a comment »